Anger over ONGC decision to hire two Hercules rigs

Vol 11, PW 16 (13 Dec 07) Exploration & Production

Drillers are accusing ONGC of double standards following its surprise decision this month to hire two jack-ups from US-based Hercules Offshore.

On December 5, US-based Hercules Offshore announced ONGC had awarded three-year contracts each for â€کultra shallow water’ rigs Hercules 258, now working for Cairn at Ravva, and Hercules 260, under repair at the Sabine Pass shipyard in Texas. Several drillers angrily complain ONGC’s award smacks of favouritism and scandal.

“There were six rigs bidding,â€‌ we hear. “But ONGC made it seem Hercules was the only bidder.

â€‌ Other rigs were Blake 202 and Blake 303 from Blake Drilling, Pride Wyoming from Pride International and Atwood Richmond from Atwood Oceanics. “The decision to hire Hercules was taken suddenly, without evaluating competing rigs,â€‌ adds a source.

“Hercules was given the contract on a â€کnomination’ basis.â€‌ ONGC’s top management, believe some, was given the impression that only Hercules had offered suitable rigs.

“One bidder wrote a protest letter,â€‌ says a source. “But ONGC was unmoved.

â€‌ Says another: “Atwood Richmond was the most suitable because she can drill in even shallower waters than the Hercules rigs.â€‌ Atwood Richmond can drill in depths as shallow as 9.5-ft while the Hercules rigs can’t drill in anything shallower than 12-ft water.

“If you stand on the beaches at the Gulf of Mexico you will see many â€کultra shallow water’ rigs idling,â€‌ adds another bidder. “They have no work because most of the shallow water oil has been drained out.

How come ONGC paid such high rates on a nomination basis for the Hercules rigsâ€‌ Others say, “There’s a lot more than meets the eyeâ€‌ to this contract. A senior ONGC source dismisses the allegations.

“We went to tender before awarding this contract,â€‌ he says. “Nobody else was offering such rigs.

If we have a (drilling) job and a rig is certified as workable it is immaterial if the rig is three or 10 years old. Rigs can always be upgraded.

â€‌ ONGC has hired Hercules 260 at an effective day rate of $195,882 and Hercules 258 at $110,500/day.